An Interview with Eva Rosenberg, EA (aka Tax Mama)

The 2012 tax season looms and we asked Enrolled Agent, Eva Rosenberg to share some of the top issues she’s teaching for 2012 filing.

What’s on your list of the top tax updates for 2012?
Updates for this year include Circular 230 changes affecting tax professionals, Form 706 and other death-related filings, per diem rates and reporting, client consents and disclosure issues, and many more. One area I’m focusing on is the Voluntary Classification Settlement Program (VCSP).

No. 1: The Voluntary Classification Settlement Program
There has been a long-running battle between the IRS and employers about defining a worker’s status as employee or independent contractor. The IRS has pursued employers through payroll audits, but audits and collection actions are time-consuming and costly. Someone had the insight that the IRS could collect more money if it offered incentives for employers to come clean voluntarily. So the Voluntary Classification Settlement Program was born. Under the VCSP, taxpayers who have wrongly classified employees as contractors have an opportunity to come in from the cold. VSCP allows these businesses to reclassify workers from contractors to employees for future tax periods and, by doing so, to get some significant relief from federal employment taxes and a shield from related audits. Tax preparers need to look more closely at how VCSP works and whether or not to recommend this to their clients.

No. 2: Foreign assets and the amnesty decision
The IRS is getting more aggressive about offshore assets. They are going after assets in a growing number of countries and imposing hefty penalties. Penalties can be as high as 100 percent of the value of the account unless people participate in an amnesty program. But the rules governing amnesty are very rigid, so tax pros are having some major discussions about when to participate and when it’s better to opt out.

No. 3: The small employer health insurance premium credit.
Clients who are paying health insurance premiums for their employees can get a tax credit but the paperwork involved is monumental. Is the credit worth the extra effort it takes? That’s something the tax pro has to help the client decide.

No. 4: The RTRP exam—no time to delay
I want to raise an alarm about the Registered Tax Return Preparer test. Of the 400,000 people who must take the test by December 2013, only about 100,000 or so have passed this exam so far. Seats for the test are limited. So I urge tax preparers to reserve a test date now. It’s like a big game of musical chairs. A lot of people face being left standing when the time runs out.

No. 5: Update your website and client materials
The IRS has changed its website to comply with search engine optimization techniques, creating a mess of dead links for us to deal with. If you have IRS links on your website, or in materials you give to clients, you want to check them immediately, fixing the ones that don’t work anymore. It’s a time consuming task that no one wants at this time of year. But you don’t want to look uninformed or out-of-touch to clients and prospects.

We’re going to be facing a lot of uncertainty as this year comes to a close. The IRS is asking even more from tax professionals in terms of our education and updates, keeping our clients honest, and keeping our firms on the straight and narrow. My goal is not to make predictions from a cloudy crystal ball. It’s to give you useful information that you can use – and to help guide you to reliable sources that will keep you updated for the coming tax season.

For this and many more upcoming tax update programs this season, check out CPE Link.

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